Correlation Between TSJA and Franklin FTSE

Can any of the company-specific risk be diversified away by investing in both TSJA and Franklin FTSE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TSJA and Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TSJA and Franklin FTSE India, you can compare the effects of market volatilities on TSJA and Franklin FTSE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TSJA with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSJA and Franklin FTSE.

Diversification Opportunities for TSJA and Franklin FTSE

0.0

Correlation Coefficient

TSJA  Franklin FTSE

Pay attention - limited upside

The 3 months correlation between TSJA and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TSJA and Franklin FTSE India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE India and TSJA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TSJA are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE India has no effect on the direction of TSJA i.e., TSJA and Franklin FTSE go up and down completely randomly.

Pair Corralation between TSJA and Franklin FTSE

Given the investment horizon of 90 days TSJA is expected to generate 0.72 times more return on investment than Franklin FTSE. However, TSJA is 1.39 times less risky than Franklin FTSE. It trades about 0.12 of its potential returns per unit of risk. Franklin FTSE India is currently generating about 0.07 per unit of risk. If you would invest  2,549  in TSJA on October 26, 2024 and sell it today you would earn a total of  224.00  from holding TSJA or generate 8.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.68%
Values	Daily Returns

TSJA  vs.  Franklin FTSE India

TSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, TSJA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin FTSE India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with TSJA and Franklin FTSE

The main advantage of trading using opposite TSJA and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSJA position performs unexpectedly, Franklin FTSE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.

The idea behind TSJA and Franklin FTSE India pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.